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Business Report (South Africa): Wayne Pearce ("new managing director of Shell & BP South African Petroleum Refineries") fuels up for the road ahead: “What are the key issues affecting the refinery industry worldwide?”: “Do other Shell refineries in the world have poor relations with communities living on their fencelines?”: “What was done to improve relations or minimise the impact of Shell refineries on residents?”: What is your comment on assertions by community leaders in South Africa that Shell has different standards for refineries it operates in developed countries and those in developing countries?” ( Posted 5 Nov 04)


By Samantha Enslin


(Wayne Pearce, the new managing director of Shell & BP South African Petroleum Refineries (Sapref), who came on board in September, is passionate about rugby and hopes to learn golf while in South Africa. But his main focus will be improving efficiency and ensuring that the refinery is a good neighbour.)


What are the key issues affecting the refinery industry worldwide?


Generally, refineries face an incredibly competitive market with many suppliers driving down margins.

There is a strong focus on improving efficiency.


Additionally, across the globe there are greater demands on the social and environmental front. The world demands more social investment and rapidly improving environmental performance.


In South Africa, I see similar challenges with the country moving forward on clean fuels, employment equity and broad-based upliftment, while still seeing the competitive margin pressures reflected in import-parity regulated pricing.


Have governments elsewhere in the world helped to fund the development of clean fuels?


In South Africa the industry will be spending about R10 billion on the initiative.


It is a mixture around the world of government and the private sector working together in partnerships.


The partnership is the right way forward because it remains a strategic imperative for a country like South Africa to have its own profitable refineries, but it's equally important to move forward on clean fuels.


What are the key issues facing Sapref?


Sapref has been in the country since 1963 and is part of the fabric of south Durban. We must remain internationally competitive, but we clearly have a role to play in south Durban, to be a good neighbour and contribute to the local economy.


Our social investment needs to focus on sustainable benefits such as education and direct or indirect employment. A study conducted by the Engen refinery showed that for every person employed, six additional jobs are created. Sapref is working with schools in the area to improve capabilities.


A science lab costing R200 000 has been set up in the nearby Lamontville township funded by Sapref, Mondi and Engen.


As managing director of Sapref, how will you tackle community relations?


I have the advantage that the monthly Sapref community liaison forum has been set up to work with community organisations addressing common priorities. Sapref has a role to play of being a good neighbour, but needs help from such community organisations.


I received a very clear message that the community expects this. To do that, I will build on our openness, our partnering approach and continue with environmental improvements like our significant voluntary reduction of sulphur dioxide emissions.


Do other Shell refineries in the world have poor relations with communities living on their fencelines?


What was done to improve relations or minimise the impact of Shell refineries on residents?


It is a real issue for the entire industry. Fenceline communities have grown up over time, often after the refinery was built and the expectations of these communities have changed over the years.


At one time in Louisiana, the flare used to be regarded with affection, as a signal to help one get home at night along the banks of the Mississippi river.


Where industries and communities are close together, understanding needs to be built based on a joint view of a sustainable future.


What is your comment on assertions by community leaders in South Africa that Shell has different standards for refineries it operates in developed countries and those in developing countries?


Sapref has a commitment to being world class and takes the best of both Shell and BP.


Do communities or residents in communities close to oil refineries have a right to be angry over the impact of these industries on their health?


The issue of the impact of industry on communities' health needs to be addressed by science. Emotions do not help to determine this. There is no evidence we impact on people's health. The multipoint plan is approaching the issue in the right way by collecting real data, not emotive data.


It sounds almost uncaring to talk in this way, but it is real caring if you can determine the right priority areas that need to be addressed 

. Emotions can affect focus.


How can the recent oil spills be avoided in the future?


We regret the spills as our intention is to operate flawlessly.


Are there plans to replace any other Sapref pipelines?


The eThekwini municipality has done an independent report on the pipelines. We will follow the recommendations of the report.


What is the status of the clean-up campaign for the 2001 pipeline spill?


I think we have pretty much recovered most of what is recoverable - about 1.26 million litres. This site will be monitored next year and if there is more petrol, it will be pumped out if necessary. We look forward to returning the land to the public. This is an area where community partnership has paid off.


It is the details that make the difference. For example, ongoing contact with residents led to a decision on what type of fencing was put up around the site.


Mike Mabuyakhulu, the provincial minister for finance and economic development, mentioned in August that the current airport site, which will be vacated when a new airport is built at La Mercy, would be suited to a petrochemical hub. Does Sapref have any plans to expand if this land becomes available?


Sapref does not have any plans at this time. However, economic development is vital and if land becomes available, there is an opportunity there.


Conditions for developing a petrochemical hub were ripe previously, but other sites around the world have already received significant investment and therefore it may be the case that investment waits a little while for economic conditions to improve.


Where do you see the refinery industry in 50 years?


We will still be around. If the US president commits large funds to hydrogen cars, I think things will change over time. But I don't see any difficulty in acquiring crude oil.


What has been your best management decision?


I was involved in a bold investment in a Shell petrochemical facility in the US. We increased production capability to catch a wave of demand for ethylene between 1999 and 2001. It was an astounding success. Timing can be everything.



What has been your worst management decision?


Not to have gone into information technology stocks in 1992! Seriously, the key issue for managers is to move quickly enough. You never say 'I wish I had been slower'. One typically says 'why did we not move faster'.


For example, when setting up global businesses in Shell, the bottom line would have benefited far sooner had we done it sooner, although when we did it was a success.


What is your long-term vision for yourself?


I am keen to remain part of the petrochemical industry and to develop skills so I can lead the industry. This industry does make a difference and does help the economies of countries. As an example, south Durban contributes 8 percent to South Africa's gross domestic product.


How do you relax?


I run and I intend to learn golf while in South Africa.

I am now reading Long Walk to Freedom. That must be such a cliche. My family is keen to see South Africa and we recently went to a game park in northern KwaZulu-Natal. The monkeys around here ruin meetings because I have to stop to watch them.


What are your pet hates?


Paperwork, and I like people to get to the point quickly.


What has been your worst experience in South Africa?


Buying a car in South Africa has been a nightmare.

I have had to make four visits to the vehicle licensing office to register the car. Opening a bank account is a dream compared with the US, though.


What has been your best experience of South Africa?


The game safari in northern KwaZulu-Natal was incredible. My kids, who are 11 and 12, sat still in the game warden's Land Rover for three and half hours, four times in three days. Incredible.

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